Technical Brief – 6th Aug 2009

Big sell off, not on very heavy volume as the market sought reason to take profits. HSI faded backwards,giving ample reason for a retracement. The markets tried to hold 2600 and fought hard to contain the sell off before closing at 2606. I did say the next support was 2600. To be fair, the actual support is at 2580-2600. I did a long position on the STI (pure gamble) that this would hold. Failure to hold 2580, I will have to cut this off, along with most other positions.

UOB led the way down with worse than expected results. Across the board the market sought reason to sell off. Capitaland tested the extremely crucial 3.70 before rebounding. A crack below 3.70 is cut loss point based on chart formation. CityDev took a dive down along with many big caps.

Watch 2580 very carefully. Support turn resistance is now 2650. I will be watching for rebounds to see if a lower high is formed.My strategy is to keep on the long side and subsequently i will have to lose some profits at the end after a top is formed. A top will only be formed when we look back. So if it heads to 2650 and heads back down, it forms a lower high (a very immediate one, small picture) as it fails to break 2700. This confirms a top at 2700. Or it can break through 2700 and this will be bullish (with limited upside however) in the immediate term.

If 2580 cracks it is possible to go short on the STI but do remember to take profits fast. Downside limited to around 2490 which is gap fill and 20MA support. (heading up) 2580 is a 23.6% retracement and should offer some support there.